EX-99.(A) 4 a07-11740_1ex99da.htm EX-99.(A)

Exhibit 99(a)

FOR IMMEDIATE RELEASE

Contacts:

Stacey Calbert, Media Relations

 

Laura Conn, Investor Relations

 

(800) 775-7290

 

(972) 770-5810

 

BRINKER INTERNATIONAL

REPORTS THIRD QUARTER FISCAL 2007 RESULTS

AND ANNOUNCES ACCELERATED SHARE REPURCHASE TRANSACTION

DALLAS (April 24, 2007) — Brinker International, Inc. (NYSE: EAT) reported income from continuing operations of $54.6 million, or $0.43 diluted earnings per share, for the company’s third quarter ended March 28, 2007.  For the same quarter of fiscal 2006, the company reported income from continuing operations of $63.1 million, or $0.48 diluted earnings per share.  Before special items, earnings per diluted share from continuing operations increased to $0.44 from $0.43 in the prior year (reconciliation included in Table 3).

As a part of its plan to return capital to shareholders, Brinker also announced that it intends to enter into an agreement to repurchase approximately $300 million of its common stock through a broker-dealer in an accelerated share repurchase (ASR) transaction.

Highlights for third quarter 2007:

·                  Opened 55 restaurants, 41 company-owned, 14 franchised, including seven international restaurants;

·                  Signed agreement with Pepper Dining, Inc. to sell 89 company-owned Chili’s restaurants with plans to develop an additional 20-44 new franchised Chili’s locations;

·                  Signed three new international development agreements for nine new restaurants;

·                  Sold one company-owned On The Border Mexican Grill & Cantina restaurant with development commitments to build a total of five new franchised restaurants;

·                  Entered into a domestic development agreement with a franchisee to build three new Macaroni Grill restaurants;

·                  Declared and paid quarterly dividend of $0.09 per share; and

·                  Repurchased 3.2 million common shares for approximately $102.7 million.

Year-to-Date highlights for fiscal year 2007:

·                  Increased earnings per share from continuing operations before special items by approximately 18 percent;

·                  Opened 148 restaurants, 107 company-owned, 41 franchised, including 23 international restaurants;

  




 

·      Signed agreements with franchisees to sell 104 company-owned Chili’s restaurants with plans to develop an
        additional 51-75 new domestic franchised Chili’s locations;

·                  Signed eight new international development agreements for 31 new restaurants;

·                  Increased quarterly dividend in November by 35%; and

·                  Repurchased 7.7 million common shares for approximately $222.1 million.

Revenue Growth

Brinker reported revenues for the 13-week period of $1,123.4 million, an increase of 2.8 percent compared with $1,092.8 million reported for the same period of fiscal 2006. These revenue gains were primarily driven by restaurant capacity growth of 7.9 percent partially offset by a decrease of 4.4 percent in comparable restaurant sales (see Table 1). The company and its franchisees opened 55 restaurants in the third quarter.

Table 1:  Q3 comparable restaurant sales

Q3 07 and Q3 06, company and four reported brands; percentage

 

 


Q3 07
Comp Sales

 

Q3 06
Comp Sales

 


Q3 07
Price
Increase

 


Q3 07
Mix-Shift

 

Brinker International

 

 

(4.4

)

 

 

2.7

 

 

 

1.1

 

 

 

(0.8

)

 

Chili’s

 

 

(4.4

)

 

 

3.4

 

 

 

1.1

 

 

 

(1.4

)

 

Macaroni Grill

 

 

(4.2

)

 

 

(0.3

)

 

 

1.5

 

 

 

0.0

 

 

On The Border

 

 

(5.7

)

 

 

1.8

 

 

 

0.6

 

 

 

1.7

 

 

Maggiano’s

 

 

(3.0

)

 

 

5.0

 

 

 

0.7

 

 

 

(1.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 2007 Comparable Restaurant Sales

For the four-week period ending March 28, 2007, comparable restaurant sales decreased 3.6 percent (see Table 2).

Table 2: Month of March comparable restaurant sales

Mar 07 and Mar 06;  company and four reported brands; percentage

 

 


Mar 07
Comp Sales

 

Mar 06
Comp Sales

 


Mar 07
Price
Increase

 


Mar 07
Mix-Shift

 

Brinker International

 

 

(3.6

)

 

 

(0.3

)

 

 

0.8

 

 

 

(0.8

)

 

Chili’s

 

 

(3.0

)

 

 

0.4

 

 

 

0.7

 

 

 

(1.5

)

 

Macaroni Grill

 

 

(4.7

)

 

 

(3.3

)

 

 

1.6

 

 

 

0.8

 

 

On The Border

 

 

(6.2

)

 

 

(0.6

)

 

 

0.5

 

 

 

1.5

 

 

Maggiano’s

 

 

(2.9

)

 

 

2.6

 

 

 

0.2

 

 

 

(1.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Operating Performance

Cost of sales, as a percent of revenues, increased from 28.1 percent to 28.3 percent or 20 basis points for the quarter compared to the prior year. This pressure is due primarily to higher salmon and produce costs.

Restaurant expenses, as a percent of revenues, increased from 53.8 percent to 56.0 percent compared to the prior year, primarily driven by net gains on the sale of company-owned restaurants in the prior year, higher labor costs due to increased minimum wage rates, and continued investment in facilities.

Depreciation and amortization for the third quarter of fiscal 2007 compared to 2006 decreased $2.2 million.  The change was primarily driven by the classification of assets held for sale for the Pepper Dining transaction.

General and administrative expense decreased $9.4 million for the quarter, which was primarily driven by lower than expected variable compensation payouts due to decreased operating performance and reduced stock-based compensation expense in 2007 due to award vesting.

The effective income tax rate related to continuing operations decreased to 29.4% for the current quarter as compared to 30.9% for the same quarter last year.  The decrease in the tax rate was primarily due to incentive stock options, which are deductible when exercised.

Capital Allocation

Cash flow from operations and capital expenditures for year-to-date fiscal 2007 were approximately $390.5 million and $301.1 million, respectively.   The company repurchased approximately 3.2 million shares during the third quarter and diluted weighted average shares outstanding declined approximately 3.4 percent from 130.2 million to 125.7 million on a year-over-year basis.  Basic shares outstanding at the end of the period were 120.6 million.  Year-to-date, Brinker has repurchased approximately 7.7 million shares for $222.1 million. As of April 23, 2007, approximately $297 million remained available under the company’s share repurchase authorizations.

Total capital expenditures for fiscal year 2007 are currently estimated to be approximately $425 million, a 7.6 percent reduction from the original estimate of $460 million.  For fiscal year 2008, initial estimates for total capital expenditures range from $300 million to $325 million, including the opening of 80-90 new company-owned restaurants.

Brinker has also obtained a new $400 million unsecured committed credit facility.  The new credit facility will be utilized to fund the ASR and for general corporate purposes.

The number of shares that Brinker may repurchase pursuant to the ASR will not be known until conclusion of the transaction, which is expected to occur during the first quarter of fiscal year 2008.

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Table 3:  Reconciliation of income from continuing operations and description of special items

Q3 2007 and Q3 2006; $ millions and $ per diluted share after-tax

 

Item

 

Income Statement
Line

 

Q3 07

 

Per
Share
Q3 07

 


Q3 06

 

Per
Share
Q3 06

 

Income from Continuing Operations

 

 

 

 

54.6

 

 

 

0.43

 

 

 

63.1

 

 

 

0.48

 

 

Sale of company-owned restaurants

 

Restaurant Expenses

 

 

(1.0

)

 

 

(0.01

)

 

 

(4.4

)

 

 

(0.03

)

 

Restructuring Gains and Charges

 

Restructure & Other

 

 

1.8

 

 

 

0.02

 

 

 

(2.3

)

 

 

(0.02

)

 

Total Special Items

 

 

 

 

0.8

 

 

 

0.01

 

 

 

(6.7

)

 

 

(0.05

)

 

Income from Continuing Operations,
before Special Items

 

 

 

 

55.4

 

 

 

0.44

 

 

 

56.4

 

 

 

0.43

 

 

 

Web-cast Information

Investors and interested parties are invited to listen to today’s conference call, as management will provide further details on the quarter and an outlook for future periods. The call will be broadcast live on the Brinker Web site (http://www.brinker.com) at 9:00 a.m. Central Time today (Apr. 24). For those who are unable to listen to the live broadcast, a replay of the call will be available shortly thereafter and will remain on the Brinker Web site until the end of the day on May 22, 2007.

Forward Calendar

Third Quarter 10-Q Filing on or before May 7, 2007.

Period 10 (April) sales on May 9, 2007, after the market closes.

At the end of the third quarter of fiscal 2007, Brinker International either owned, operated, or franchised 1,756 restaurants under the names Chili’s Grill & Bar (1,318 units), Romano’s Macaroni Grill (242 units), On The Border Mexican Grill & Cantina (156 units), and Maggiano’s Little Italy (40 units).

The statements contained in this release that are not historical facts are forward-looking statements. These forward-looking statements involve risks and uncertainties and, consequently, could be affected by general business and economic conditions, the impact of competition, the impact of acquisitions and divestitures, the seasonality of  the company’s business, adverse weather conditions, future commodity prices, fuel and utility costs and availability, terrorists acts, consumer perception of food safety, changes in consumer taste, changes in demographic trends, availability of employees, unfavorable publicity, the company’s ability to meet its growth plan, acts of God, governmental regulations, and inflation.

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BRINKER INTERNATIONAL, INC.

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Thirteen Week Periods Ended

 

Thirty-Nine Week Periods Ended

 

 

 

March 28,

 

March 29,

 

March 28,

 

March 29,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,123,428

 

$

1,092,790

 

$

3,233,950

 

$

3,077,769

 

Operating Costs and Expenses:

 

 

 

 

 

 

 

 

 

Cost of sales

 

318,463

 

307,205

 

903,582

 

869,668

 

Restaurant expenses (a)

 

628,763

 

587,950

 

1,803,742

 

1,686,093

 

Depreciation and amortization

 

46,116

 

48,357

 

143,090

 

142,670

 

General and administrative

 

44,367

 

53,735

 

141,658

 

152,540

 

Restructure charges and other impairments

 

2,941

 

(529

)

13,571

 

1,950

 

Total operating costs and expenses

 

1,040,650

 

996,718

 

3,005,643

 

2,852,921

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

82,778

 

96,072

 

228,307

 

224,848

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

6,446

 

5,630

 

19,297

 

17,195

 

Other, net

 

(995

)

(939

)

(2,627

)

(1,123

)

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

77,327

 

91,381

 

211,637

 

208,776

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

22,756

 

28,250

 

65,235

 

67,833

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

54,571

 

63,131

 

146,402

 

140,943

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of taxes

 

 

1,626

 

 

(1,555

)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

54,571

 

$

64,757

 

$

146,402

 

$

139,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.45

 

$

0.49

 

$

1.19

 

$

1.09

 

Income (loss) from discontinued operations

 

$

0.00

 

$

0.02

 

$

0.00

 

$

(0.01

)

Net income per share

 

$

0.45

 

$

0.51

 

$

1.19

 

$

1.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.43

 

$

0.48

 

$

1.16

 

$

1.07

 

Income (loss) from discontinued operations

 

$

0.00

 

$

0.02

 

$

0.00

 

$

(0.01

)

Net income per share

 

$

0.43

 

$

0.50

 

$

1.16

 

$

1.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average

 

 

 

 

 

 

 

 

 

shares outstanding

 

122,019

 

127,868

 

123,213

 

129,498

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average

 

 

 

 

 

 

 

 

 

shares outstanding

 

125,712

 

130,182

 

126,144

 

131,778

 

 


(a)          Current year restaurant expenses include a $1.7 million gain on the sale of company-owned restaurants in the third quarter and a $3.2 million gain on the termination of interest rate swaps in the first quarter.  Prior year restaurant expenses include net gains on the sale of company-owned restaurants of $7.0 million during the third quarter and a $3.3 million gain on the sale of real estate in the first quarter.

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BRINKER INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

March 28,

 

June 28,

 

 

 

2007

 

2006

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

$

250,842

 

$

237,385

 

Assets held for sale

 

133,688

 

121,275

 

Net property and equipment (a)

 

1,786,670

 

1,679,390

 

Total other assets

 

191,311

 

183,729

 

Total assets

 

$

2,362,511

 

$

2,221,779

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities

 

$

551,453

 

$

492,454

 

Liabilities associated with assets held for sale

 

6,017

 

5,069

 

Long-term debt, less current installments

 

593,380

 

500,515

 

Other liabilities

 

158,099

 

147,909

 

Total shareholders’ equity

 

1,053,562

 

1,075,832

 

Total liabilities and shareholders’ equity

 

$

2,362,511

 

$

2,221,779

 

 


(a)          At March 28, 2007, the company owned the land and buildings for 319 of the 1,369 company-owned restaurants.  The net book values of the land and buildings associated with these restaurants totaled $271.7 million and $269.5 million, respectively.

BRINKER INTERNATIONAL, INC.

RESTAURANT SUMMARY

 

 

 

Total
Restaurants

 

Third Quarter
Openings / Acquisitions
(a)

 

Third Quarter
Closings / Sales
(a)

 

Total
Restaurants
March 28,

 

Projected
Openings
Fiscal

 

 

 

Dec. 27, 2006

 

Fiscal 2007

 

Fiscal 2007

 

2007

 

2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company-Owned
Restaurants:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chili’s

 

 

944

 

 

 

34

 

 

 

(1

)

 

 

977

 

 

 

125-130

 

 

Macaroni Grill

 

 

224

 

 

 

 

 

 

(8

)

 

 

216

 

 

 

4-5

 

 

Maggiano’s

 

 

39

 

 

 

1

 

 

 

 

 

 

40

 

 

 

4-5

 

 

On The Border

 

 

128

 

 

 

6

 

 

 

(3

)

 

 

131

 

 

 

12-14

 

 

International (b)

 

 

5

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

1,340

 

 

 

41

 

 

 

(12

)

 

 

1,369

 

 

 

145-154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise Restaurants:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chili’s

 

 

202

 

 

 

4

 

 

 

 

 

 

206

 

 

 

10-15

 

 

Macaroni Grill

 

 

13

 

 

 

2

 

 

 

 

 

 

15

 

 

 

3-4

 

 

On The Border

 

 

23

 

 

 

2

 

 

 

 

 

 

25

 

 

 

4-6

 

 

International (b)

 

 

134

 

 

 

7

 

 

 

 

 

 

141

 

 

 

38-41

 

 

 

 

 

372

 

 

 

15

 

 

 

 

 

 

387

 

 

 

55-66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Restaurants:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chili’s

 

 

1,146

 

 

 

38

 

 

 

(1

)

 

 

1,183

 

 

 

135-145

 

 

Macaroni Grill

 

 

237

 

 

 

2

 

 

 

(8

)

 

 

231

 

 

 

7-9

 

 

Maggiano’s

 

 

39

 

 

 

1

 

 

 

 

 

 

40

 

 

 

4-5

 

 

On The Border

 

 

151

 

 

 

8

 

 

 

(3

)

 

 

156

 

 

 

16-20

 

 

International

 

 

139

 

 

 

7

 

 

 

 

 

 

146

 

 

 

38-41

 

 

 

 

 

1,712

 

 

 

56

 

 

 

(12

)

 

 

1,756

 

 

 

200-220

 

 

 


(a)          During the third quarter of fiscal 2007, the company sold one On The Border restaurant to a franchisee.  The company and its franchisees opened a total of 55 new restaurants during the quarter ended March 28, 2007.

(b)         At the end of the third quarter of fiscal year 2007, international company-owned restaurants by brand were four Chili’s and one Macaroni Grill.  International franchise restaurants by brand were 131 Chili’s and 10 Macaroni Grill’s.

FOR ADDITIONAL INFORMATION, CONTACT:

LAURA CONN
INVESTOR RELATIONS
(972) 770-5810
6820 LBJ FREEWAY
DALLAS, TEXAS 75240

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